Jurrien Timmer, head of global macro at asset management behemoth Fidelity, believes that the U.S. Federal Reserve could potentially restart quantitative easing (QE) engines.
This is something that both Bitcoin and gold bulls have been anticipating.
If the Fed lowers rates beyond what deems justified by the Taylor Rule, the yield curve could well bear-steepen unless the Fed engages in yield curve control.
That would restart the QE engines, which is something that both gold and Bitcoin appear to have been anticipating. The… pic.twitter.com/ZUVRxEFvxv
— Jurrien Timmer (@TimmerFidelity) August 1, 2025
An overly dovish pivot?
Timmer does not rule out that the Fed could end up lowering interest rates beyond what is justified by economic indicators.
In such a case, the yield curve could “well bear-steepen,” meaning that long-term rates would rise at a faster pace compared to short-term rates. This would signal that the market is worried about future inflation.
Buying a lot of long-term bonds would be necessary for flattening the yield curve.
As reported by U.Today, the Fed refrained from cutting the benchmark rate earlier this week, but at least two rate cuts are expected to be implemented this year.
More balance sheet expansion?
As noted by Timmer, the Fed still has plenty of room for further balance sheet expansion. As of now, its balance sheet is 23% of the U.S. For comparison, the balance sheet of the central bank of Japan (BoJ) equals 117% of the country’s GDP.
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